FEHB & Medicare – Do You NEED to Elect Part B?

8.30.24: Audio automatically transcribed by Sonix

8.30.24: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
But welcome back to the federal retirement show. I'm your host Val Majewski with American Benefits Exchange. Really appreciate you. The federal employee taking time out of your busy schedule because I know you've got a lot to do, a lot going on. To view our content, to visit this radio show, podcast, the federal retirement show. Because the goal of this show, if you're not familiar, is for us to give out accurate and honest information when it comes to your benefits and retirement scenarios, there's a lot of things that we believe you need to know, and that's why we do what we do. We want to provide you with this information so you can make the best decisions. If there are topics or things that you want to hear, please reach out to us. If there are questions that you have that are very unique and specific, reach out to us. How can you do that? You can go to our website, federal Retirement Show dotcom, fill out the form. We will be in touch with you. One of our representatives across the country. If it's not me specifically, we'll be reaching out to get you the information that you're looking for. Answer all your questions just to make sure you get some peace of mind, because I know this can be daunting. There's a lot of information out there, a lot of things that you need to know. One of our biggest things is you don't know what it is you don't know.

Speaker1:
We want to fill in those blanks. Now, speaking of not knowing what you don't know, let's dive into today's content and talk about Medicare. First of all, what is Medicare? We're going to see and answer this question. Do you need to elect option or part B. So let's dive into today's information as we discuss Medicare and your federal employee health benefits. Now, this question or this topic comes from one of our reps across the country at a question from one of the scenarios that they were working and the federal employee was asking about, uh, their FB, their federal employee health benefits, and their Medicare coverage when they're turning 65 and eligible to get Medicare and how it works. If they need to elect option or say I say option B, part B with Medicare, option B is with your family, right? But part B with Medicare. And is it a good situation for them? Should they do that now we can't just give a blanket statement, you know, whether you should or shouldn't, but we're going to dive into it a little bit. Now. We're just going to scratch the surface because Medicare is its own animal, right? When it comes to, uh, deciding when to take it and, and all that it encompasses. I mean, for those of you that have turned 65 or those of you that are turning 65 in the near future, you are getting bombarded with emails with, uh, printed mail, you know, all this different marketing material that companies are sending you talking about Medicare.

Speaker1:
And if you're not used to reading all of this, or you can't make dollars and cents out of it, it can be extremely confusing. And you may not understand what Medicare is, what it covers, what it doesn't cover, how it works, how things change over time because it's a lot to digest and you've got a life. You've got work that you're still doing, or you're in retirement, traveling or visiting grandkids or working in retirement, whatever it might be, and you don't have the time and effort to digest and try to understand what Medicare is, what it covers, what it doesn't cover. Et cetera, et cetera, et cetera. So we're going to try and make this as simple as possible. And I'm going to go through it from a very high level. But then we'll try to answer the question of do you need to elect part B as this veteran employee was asking? This is a question we get asked a lot. So we've covered Medicare before and how it works with your federal employee health benefits and previous episodes. You can go and find that wherever you want to view web. Sorry, not webinars, but podcast radio shows. You can view all of that content, especially at our website, checking out our previous episodes, but when it comes to Medicare and federal employee health benefits, we want to talk about and how they coordinate, how they work together and just what exactly Medicare is.

Speaker1:
So let's dive into that first. What is Medicare? Now it says health insurance for those that are 65 and older. And I put typically, you know, because there are ways people can get Medicare prior to the age of 65, maybe they're on disability or whatever it might be. They may get Medicare early, but just normally for those that are 65 and older, this is government run health care, essentially, um, stuff that you've been paying for your entire working career. So health insurance for those that are 65 and older, there are various parts of Medicare, and all the different parts have different coverages that they participate in, right, or that they help out with. And there's generally four parts to Medicare, four parts. There's part A, which is uh, it covers hospitals. And I just this is just a general blanket. Again high level terms. Part A covers hospitals. So if you have a hospital stay and you're on Medicare and you have part A, uh, this part will pay or portion will pay for your medical stay or your hospital stay. Uh, part A is also what you automatically get, I say automatically, you generally are going to elect this to start Medicare at age 65. Most start right on the nose at 65. Part A is something that you can get right away at age 65. This is something that you've also been, uh, you know, paying for your entire working career.

Speaker1:
So if you look at, you pay FICA taxes, right? You pay for Social Security and Medicare, you also pay for, um, uh, some income taxes, things like that. But your Social Security and Medicare, which is generally 7.65% of each paycheck, 6.2 of which goes to Social Security. You are paying for Medicare, you're paying for Medicare. We'll go over costs here on the next slide. But part A is what you've been paying for your entire working career. That's the money you've been putting in. Part B covers doctors and specialists. So hospitals with part A doctors and specialists part B, part C of Medicare is also known as Medicare Advantage. Not necessarily known as part C but Medicare Advantage. This is not something we're going to really talk about today, because most federal employees are not going to be in the need for a Medicare advantage plan, but that's also known as part C of Medicare Part D of Medicare's prescription drug plans. And most federal employees are not going to need part D, either, because their FB has prescription drug coverage, unless there is some drug on a formulary where a part D plan makes more sense and you can get it at a cheaper cost. But in most cases your FB will cover your prescription drug plan or prescription drug needs, and the cost will be, you know, pretty cheap compared to other part D plans, but it's always good to take a look if.

Speaker1:
You're eligible for that and see if you can save some money. So FB and Medicare, how do they work together? Okay. How do they work together. Well they coordinate. So this is for let's just say federal employees that are either working when you turn 65 or are retired when you turn 65, because Medicare just typically, as I said, is not for those that are under 65. It's something that you're going to get and you get you're entitled to start able to start once you turn 65 while you're working, if you're still working as a federal employee and you have a federal employee health benefit plan, your FB will be your primary while you're working. And if you turn 65 while you're working, Medicare will then be your secondary. Okay. Medicare will be your secondary. Once you're retired, it flips, it flips. That's when Medicare will be your primary and your FB will be your secondary Now FB your federal employee health benefits and Medicare, no matter which one's primary or secondary. They coordinate to pay their particular part of a claim, and hopefully if you have both of them working together, it will limit your out of pocket costs. Now, there is something else with Medicare that it did not mention because Medicare doesn't cover everything. Right. This is for, let's say, the private sector. If somebody in the private sector were to have Medicare, just Medicare Part A and part B. Typically Medicare covers about 80%, 80% of covered expenses is what Medicare will cover.

Speaker1:
The additional 20% is left to you. Now, in a traditional sense, that's where people either say, well, I don't want to just just cover 80%. I want to try to cover as much as I can. So somebody would get a medigap or a Medicare supplement policy to go in and cover those gaps, or as many of those gaps as they possibly can. Your federal employee health plan is essentially your Medigap plan in retirement. It acts like your Medicare supplement plan to fill in most of the gaps. So if you had a full amount of coverage, Medicare Parts A and B and your FB, you're out of pocket. Expenses should be very limited, should be very limited. I can't guarantee it's going to cover everything, right? Because not everything is essentially covered by all, but it should limit your out of pocket expenses. If you had everything, uh, parts A and B, you know how this how this worked, right? I said part A is something that you've been paying for while you're working. Okay, 1.65%. Uh, sorry, 1.45% comes out of your paycheck to go towards Medicare. Uh, so you're going towards. Yeah, you are paying for it now. They say, hey, part A is free. It's not free because you've been paying for it. So I just I don't want to get it mixed up like, oh yeah, you get part A for free.

Speaker1:
No, you've been paying for it okay. You've been paying for it. Money's coming out of every paycheck, as I said 6.2 to Social Security 1.45. It's going out to Medicare. Um, you've been paying for it and you get part A, you have the ability to elect part A when you turn 65, and there is no more cost for that. Okay. No more costs coming out of a paycheck going towards Medicare. So part A, you can elect when you first get hired and first get hired when you turn 65. I apologize and you can get your Medicare card, have part A and if you're still working great they're going to coordinate with each other. Said FB is going to be your primary part a of Medicare is going to be your your secondary. You can elect now part B is optional. And this is the question that came up. So I've done all this kind of foundational work on a very high level. Right. We're just kind of scratching the surface on Medicare. But uh, part B is something that you can elect. This is an optional coverage. You do not have to get it. I would highly recommend, if you're eligible to get part A as soon as you turn 65, get it right. That's it's only going to help out. Um, unless there's actually one one reason why you wouldn't get it. I'm going to pause for a second if you if you are using an HSA, if you're using an HSA plan through the government, or if you're just you can't have or utilize an HSA and have Medicare at the same time.

Speaker1:
So if that's the case, then maybe you put off using your or electing Medicare when you turn 65. Most federal employees that I talked to are not in this situation. So you're going to elect in general part A when you first turn 65, you're going to turn that on. Um, part A is provided again at zero cost. You don't have to pay any more for it. If you do elect part B. Now part B is optional. You do not have to choose to get part B. You don't have to get it at any time. But as I said, part B will cover doctors and specialists, uh, outpatient services, things like that. And this is an optional optional coverage. There is a cost though for part B now the current cost is $174.70 per month. That is the starting cost for that. For those that make too much money, it can be significantly higher than this. So based on your income, there's a two year look back on the income. We can talk about more of this. This is called Irma. But we can look at um, and we've we've had episodes where we've talked about this, but you want to make sure that you're making the right decision when it comes to part B, okay. Part B again is is an election.

Speaker1:
It's it's optional. You don't have to get it ever. You can just have part A and stick with your FB in retirement. And maybe you're good and maybe you're used to your federal employee health benefits covering most of your, uh, medical expenses. And there's no need to pay extra money for part B because you've really got limited out-of-pocket expenses. As it is. Part B would just be kind of a wrapper around the whole thing where you really, you really will not have many or much out of pocket costs. If you've got all of it, you just got to pay for the premium. So it's more like you're prepaying for that additional health care. You know, at 174, 70 a month currently. And that that cost is generally gone up every single year, at least since I've been, you know, in this industry, helping federal employees and talking about health insurance. But again, I just want to I want to reiterate that it's an election. You don't have to take it now. Once you're eligible to take it. And if you don't take it, you can be penalized for that. And you'll get a surcharge or a penalty assessed to your cost of part B if you do elect it down the road. Now, I will say this if a federal employee is 65 and still working, your clock does not start for part B until you retire. Retired. Let's say you're already retired and you hit 65, yet you get part A and you can elect part B if you choose not to get part B initially, and then down the road you decide to get it.

Speaker1:
Well, you're going to have a little extra surcharge added to your cost because you didn't get it right away when you were eligible to do so. So your clock does not start until you're either retired and then turn 65, or if you're still working when you turn 65, once you retire, that's when that clock starts. Every year you wait is you're going to add additional additional surcharge to that. Now part B costs typically are deducted from Social Security payments. If you're still working you most likely are not yet getting a Social Security check. So you will have to pay directly for your part B cost once you start collecting Social Security. Part B will be deducted from your Social Security payments. So if you're if we're kind of summarizing all of this right, FB and Medicare, they coordinate together. That's not something you have to worry about. They they they work well together. They they'll coordinate. So whatever you've got and whatever needs to be covered, they will coordinate together. Again, reminder while you're working, FB is your primary Medicare is your secondary. Once you're retired, that flips. Medicare becomes your primary. Your FB is your secondary option. I say option part A, you need to elect. I would highly recommend electing as soon as you turn 65.

Speaker1:
Unless that interesting circumstance that I that I mentioned earlier, that's rare that I see, but it does happen. And then part B is optional. Part B is optional. Understand there's an additional cost for that. It could complete your health plan and really limit your out of pocket costs if you go to the doctor often. If you don't, if FB covers everything along with Medicare Part A and you're fine, then you're not going to be penalized for not taking it if you never take it. But understand that if you do elect to take it down the road, you'll have a penalty, a surcharge that you are paying on top of the regular part B premium. So the question goes back to do you need to elect part B? Is this a necessity? And this was more of the question do you need to in the general sense the answer is no. You do not need to. It is not mandatory for you to take part B in order to keep your FB It is not Mandatory. Now, there are certain there's a certain plan out there. That's if you're a postal employee, there's a little bit of a difference there. Okay. Some of the new things are coming out with depending on when you're watching this. They are requiring you to take both part A and part B in order to keep it in retirement. But just in general, I said I'm going high level here in general. No, you do not need to take part B of Medicare, should you? That depends on a number of circumstances.

Speaker1:
I cannot, in a blanket statement give any recommendation, say yes or no. It depends upon your circumstances. It depends upon how often you go to the doctor. What are your medical expenses like? You know, would would Prepaying 174, 70 a month help on the back end and eliminate some of those extra out of pocket costs if the money makes sense, if you're going to pay more by not taking part B than you would by taking part B, then why would you not take it right if it's going to limit your cost by taking part B? So just understand everybody's Circumstances, everybody's situations, things that they're going to the doctor for, medical expenses, whatever. All those things are different from person to person, family to family. If you want to dive a little deeper into your situation, that's why I highly recommend go to our website, Federal Retirement Show.com. Fill out the form, request some information. We'll do a full benefits review, but we'll answer your specific questions because we want to get you the information that you need so you can make the best decisions. Once you're in retirement or nearing retirement or planning for retirement. It's not just about Medicare, but today we're talking about Medicare and your health benefits. So take a look at your situation, see if it's something that that you feel like you're leaning towards or not leaning towards, but know all the variables, know all the information.

Speaker1:
Again, no, you do not 100% need to. But should you? Maybe you speak with an expert, speak with somebody that can analyze your situation, that is an expert in federal benefits and can give you some some deeper dive into this information. So reach out to us again, go to our website, fill out the form. Be happy to help in any way that we can. Well, I hope you appreciated today's episode. Um, if you're interested again in more, go to our website, reach out to us, we'll contact you individually and make sure that we go over your personal situation. Point you in the right direction. Again, my name is Val Majewski with American Benefits Exchange. The pleasure, as always, to come to you here through the Federal Retirement Show. If there are any topics or things that you want to hear. As I said earlier, we want to hear from you. If not, we're just going to keep pushing out the information that we believe you need to know. But we'd love to hear specifically if there are any topics that we have not discussed in our 100 plus episodes, we want to make sure we're giving you the information that you all need, not just that we think you need, but we want to make sure it's specific to what you all need. So thank you so much for your time and attention. Look forward to seeing you on a future episode.

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